Adjusted for seasonal shifts, Australians spent just over $70.8 billion on goods and services in June, down 0.5% from May.
This was driven by a significant drop (-1.8%) in spending on services - with Aussies spending less on recreation and culture, hotel accommodation and dining out.
Through the year, household spending was up 3.1% compared to June '23 - but given prices rose 3.8% over the same period, in real terms it likely decreased.
Given services inflation still ticked up slightly in the June quarter CPI, this might be an encouraging sign that demand (and hopefully therefore prices) for services will ease in the coming months.
However, household spending on goods increased in June, up 0.5%, while the ABS also revealed on Tuesday that retail trade rose 0.5% through the month.
It might not be until 4 September and the household consumption numbers in Q2 GDP that the RBA draws its conclusions about how household spending is truly tracking.
Australia divided on spending cuts
In the most recent Statement on Monetary Policy (SOMP), the RBA cited soft household consumption growth in the March quarter GDP, as well as higher than expected savings.
RBA boss Michelle Bullock has pointed to this strong block of savings as evidence that Aussies are able to absorb the cash rate hikes - everyone just tightens the purse strings a little bit, and inflation will ease.
However, findings from the Infochoice State of Aussies' Savings report suggests there is an increasing split among Aussies who have been able to absorb high rates and those who are struggling.
Only 43.4% of respondents reported cutting back on spending over the past 12 months, despite high interest rates supposedly impacting everyone.
Those who are cutting back are making sacrifices on essentials like insurance (22.7%) and utilities (18.8%), while more than half have been forced to spend less on groceries.
Moreoever, almost one in six respondents reported now having less than $1,000 in total savings, while nearly a third have less than $5,000 remaining.
It's a reminder that the macro data is just that - while as a collective, Australia might have spent 3.1% more than this time last year, plenty of people who are struggling likely have seen enormous drops in spending, while others might have seen theirs increase.
A hold next Tuesday?
The June data paints an overall mixed picture of how Australia is tracking with bringing down inflation.
A quarterly price increase of 1.0% will probably mean a reprieve for mortgage holders at next week's monetary policy meeting, but it still looks like it may be some time before the RBA has the confidence to start cutting rates.
The inflation read was bang on what the RBA forecast in the June Statement on Monetary Policy - which assumed rate cuts would not begin until well into 2025.
Picture by Anna Kaminova on Unsplash
